Why it is important to pay your invoices on time!

1. Financial Consequences

One of the first reasons is that if you delay your invoices, you must deal with financial consequences, directly or indirectly.

2. You must pay the invoice eventually anyway!

One of the main reasons you should pay your invoices on time is that at the end of the day, or month, you do have to pay the invoices anyway.

3. It becomes easier to approach suppliers and clients in the future

When you are running a reliable business, it multiplies the number of people that want to work with you. It’s when you are looking to approach new clients or suppliers, you can smoothly go into the negotiations with all of your numbers in tow.

4. A good relationship with your supplier “pays” too

When you are notorious for being a business that clears invoices on time, suppliers and clients will automatically trust you more than a business they know nothing about, or one that is known for not clearing their invoices on time.

5. The same goes for the buyers or clients you have

If you are in a business where your output depends on how quickly your suppliers get you your supplies, having a good relationship with your supplier will inadvertently also affect the way you provide to the people who buy from you.

6. It requires less effort overall

If you end up in the cycle of late payments, you have to think before taking every step. You might end up having to deal with several different things if you make late payments regularly.

7. You may have to pay a “commercial interest” if your invoices are cleared late

Your suppliers can choose to charge you a commercial interest if your payment is late for over 30 days. This interest would be a statutory interest in the UK (8% in addition to the base interest Bank of England has specified for businesses to business transactions)

8. Businesses in the Public Sector have it worse

If your business is in the public sector, you don’t just have to clear your invoices on time because of all the reasons we have already mentioned, and you need to do it because the law requires you to.

9. Your business could land on a late payment directory

Before everyone used the internet in their daily lives, the culture of late payments was worse.

  1. https://www.gov.uk/guidance/prompt-payment-policy
  2. https://www.gov.uk/late-commercial-payments-interest-debt-recovery/charging-interest-commercial-debt#:~:text=on%20late%20payments-,Interest%20on%20late%20commercial%20payments,for%20business%20to%20business%20transactions.
  3. https://brodmin.com/payments/late-payment-of-commercial-debts/

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